Anxiety, confusion trail proposed electricity tariff hike

Amassive rush by electricity consumers to recharge their accounts ahead of the alleged planned hike in tariffs has sent the various platforms of the Distribution Companies (DisCos) into a gridlock, according to reports from across the country.
Although speculations had put today as the beginning of the planned tariff regime, the DisCos said they were yet to receive the go ahead to that effect from the industry regulator, the Nigerian Electricity Regulatory Commission (NERC), at press time last night.

But that has not stopped consumers from besieging the payment counters and platforms of the DisCos for the purchase of token to recharge their electricity accounts.

Consumers told The Nation the difficulties they have been facing for some days now in their bids to recharge on the various platforms of the DisCos since the speculation of increase in tariff became an issue.

Some insinuated that the DisCos were tampering with their network to force through the hike.

An Ikeja Electric (IE) customer in Ojodu, Ibukun Olaoluwa, said for five days there has been network challenge to load the electricity token he hurriedly purchased ahead of today’s planned increase.

An Eko Electricity Distribution Company (EKEDC) customer, Victor Umeh, said: “It is frustrating. I planned to recharge ahead of tomorrow’s (today) planned hike, but the purchasing platform has been challenging.”

The confusion sparked by the development is not helped by conflicting statements from the distribution companies (DisCos).

For instance, the Abuja Electricity Distribution Company (AEDC) announced on Sunday a tariff increase on the strength of the floating of the foreign exchange only to backtrack 18 hours later.


It said in the first public announcement: “Effective July 1st, 2023, please be informed that there will be an upward review to the electricity tariff influenced by the fluctuating exchange rate.

“Under the MYTO 2022 guidelines, the previously set exchange rate of N441/$1 may now be revised to approximately N750/$1 which will have an impact on the tariffs associated with your electricity consumption.

“For customers within band B and C, with supply hours ranging from 12 to 16 per day, the new base tariff is expected to be N100 per kWh while Bands A with (20 hours and above) and B (16 to 20 hours) will experience comparatively higher tariffs.

“For customers with a prepaid meter, we encourage you to consider purchasing bulk energy units before the end of this month as this will allow you take advantage of the current rates and potentially make savings before the new tariffs come into effect.


“For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August.”


In reversing itself, however, it said it never got the go ahead from NERC prior to the announcement.Its words: “Please, disregard the communication circulating in the media regarding the review of electricity tariffs.

“Be informed that no approval for such increment has been received. We regret any inconvenience.”


Some of the other DisCos feigned ignorance of any planned rise in tariffs.

A senior manager in a leading Lagos-based DisCo said: “We have not been advised or directed on such. The NERC is the only body that can order us on tariffs review, and as at this evening (yesterday), we have not received any correspondence on this from NERC.

“So, we are also watching the speculation that has filled the air.”

Top officials of some DisCos, speaking on condition of anonymity, said the development in the FOREX market has made it inevitable for them to adjust their financial outlay.

The General Manager, Public Affairs of NERC, Dr. Usman Abba-Arabi, could not be reached on the phone for confirmation. Messages sent to his Whatsapp number were not replied.

AEDC: No tariff increase on July 1

The Abuja Electricity Distribution Company (AEDC) insisted last night that there is no upward review of tariff for now.

Its Chief Marketing Officer, Mr. Donald Etim, informed The Nation by text message yesterday that the company was yet to get any directive on tariff adjustments from the NERC.

He said: “We have neither received any directive on tariff adjustments nor have we adjusted same.

“To the best of my knowledge, there’s no tariff review scheduled for 1 July.”

Asked why it was difficult for customers to purchase the units, the AEDC Chief Marketing Officer blamed the challenge on poor network.

He said: “It has nothing to do with tariff. It could be due to poor network or bad weather.”

Sources at the Eko Electric and Ikeja Electric last night denied fears that the DisCos were deliberately stalling services to enforce the planned tariff increase.

Akinola Ayeni, the media spokesman of the Ikeja Electric, attributed the poor services being experienced as purely technical and not deliberate ploy by the Ikeja Disco to deny customers services.

“To say that Ikeja Electric is deliberately stalling the services is untruth and uncalled for. I have recharged my metre today.

“Some other persons experienced difficulty but this is just a coincidence and has nothing to do with service denial by the Disco.

“All these talks are figments of peoples’ imagination,” Ayeni said.

A top staff at Eko Electric who does not want to be named said it was rather unfortunate that some customers were experiencing issues with recharging their metres.

He advised the affected consumers to get in touch with the customer care to have their issues resolved in no time.

On whether the distributing company had received a memo introducing the new tariff, the source said Eko Electric was yet to receive any such directives.

“We’re operating in a regulated sector. As such, no DisCo can do anything on its own volition.

“As we speak, we are yet to receive any correspondence from our regulators (NERC) as to any tariff increase. The media frenzy is fueling the speculation on tariff increase.”

Also reacting yesterday on the jam in processing token purchased by consumers, the Federal Competition and Consumer Protection Commission (FCCPC) said:”We are in touch with @IkejaElectric, which has confirmed that this issue is being experienced due to challenges within its system.

“However, the Commission is actively engaging with the DisCo to resolve these challenges as soon as possible. Please watch this space for updates.”

Electricity tariff review, either increase or decrease, is a bi-annual exercise as provided for in the Multi-Year Tariff Order (MYTO) schedule for the sector.

Relying on Section 76 of the Electric Power Sector Reform Act (EPSRA) 2005, the NERC adopted the MYTO methodology for electricity pricing in Nigeria, which sets out the basis, pricing principles and procedures for effecting minor and major reviews of electricity tariffs in Nigeria.

The MYTO provides a tariff path for the electricity industry, with biannual minor reviews to take into account the impact of changes in a limited number of parameters, specifically inflation, dollar exchange rate to naira, natural gas price and available generation capacity, and major reviews every five years.

Similarly, Section 9 of the ”Regulation on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry” allows for Extraordinary Tariff Review.

The proposed increase is coming despite the inability of the operators to meet the threshold of supplying, at least 5,000 megawatts a year after signing contracts with NERC.

NERC’s current Service Based Tariff (SBT) was benchmarked on an exchange rate of N441/$ and inflation of 16.97 per cent. Currently, the inflation rate is 22.41 per cent; a figure that experts say may hit 30 per cent by the end of the month, given the floating of the naira and petrol subsidy removal.

An economist and Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the proposed review smacked of insensitivity.

Yusuf, in an interview with The Nation, faulted the proposed increase, saying that the timing is wrong.

He said though DisCos are private companies, their services are of great social significance.

He said: “It is often a dilemma when the private sector is playing a dominant role in the delivery of a service, which is social in nature or quasi-social.

“Nonetheless, it is difficult to accept the exchange rate argument to justify the increase.

“The truth is that for over 80 per cent of companies, product pricing has always been based on parallel market exchange rate, or close to it.

“Not up to 20 per cent of companies had unfettered access to the official FOREX window for all their FOREX needs.”

Yusuf said the FOREX unification argument being put up by the DisCos cannot justify the proposed tariff increase.

The CPPE boss, an advocate of a free market economy, nevertheless warned that contemplating such an increase at this period when Nigerians are still grappling with the shocks of the fuel price increase is wrong.

He said: “It is most inappropriate and even insensitive to come up with a price increase of such magnitude at this time when many households are still struggling to adjust to the phenomenal increase in petrol prices.

“We need social stability for any business to thrive. Many other businesses are also impacted by the exchange rate unification. But not many have increased prices so phenomenally.

“The DisCos seem to be taking advantage of monopoly privileges.

“We recommend that both the timing and rate of tariff changes should be reviewed in the interest of social stability.”

<<the nation>>